Rural Lives Understanding financial hardship and vulnerability in rural areas Mark Shucksmith University of Newcastle Polly Chapman Impact Hub Inverness Jayne Glass and Jane Atterton Rural Policy Centre, Scotland’s Rural College March 2021 Rural Lives Understanding financial hardship and vulnerability in rural areas Contents Executive summary 2 1 Introduction 5 2 Experiences and impacts of financial hardship 7 2.1 Changing rural economies 7 2.2 The welfare state in rural areas 10 2.3 Voluntary and community organisations in rural areas 13 2.4 Families, friends and neighbours 15 2.5 Housing, fuel poverty, cost of living, digitalisation and social care 16 2.6 Debt, savings, agency and coping strategies 19 2.7 Place and narratives of change 22 2.8 Rural poverty within a pandemic 25 3 Conclusions: Challenges and policy opportunities 25 3.1 The importance of cumulative and complementary support 25 3.2 The need to combine person-based and place-based measures 27 3.3 Policy challenges and opportunities 28 Glossary 35 Acknowledgements The authors are indebted to all those who participated in this research, whether through offering us advice and information, or by agreeing to be interviewed. Your names are not listed anywhere in the report to preserve confidentiality, but we are immensely grateful: we hope we have done justice to your stories. We also wish to thank the members of our distinguished Advisory Group for their comments, advice and support throughout the project. Members of the Group were: Margaret Clark, Nicola Crook, Derek Egan, Tim Goodship, Rebecca Graham, Vanessa Halhead, Linda Hutton, Sarah Kidd, Karen MacNee, Coinneach Morrison, Angus Murray, Anne Murray, Michael Nixon, Norma Robson, Carol Tannahill and Ellie Thompson. Colleagues within our own organisations have also supported this project in many ways: particular thanks to Elliot Meador and Andrew Dunsire (SRUC) and Clarrie Murdoch (Impact Hub Inverness). Finally, this research would not have been possible without the generous financial support of Standard Life Foundation. Standard Life Foundation has supported this as part of its mission to contribute towards strategic change which improves financial wellbeing in the UK. The Foundation funds research, policy work and campaigning activities to tackle financial problems and improve living standards for people on low-to-middle incomes in the UK. It is an independent charitable foundation registered in Scotland (SC040877). 2 Rural Lives Understanding financial hardship and vulnerability in rural areas Executive Summary Recent analysis shows that half of all rural residents in of financial hardship and vulnerability not only because Britain fell into poverty at some time during 1991-2008, and it makes household budgeting hard but also because it the Financial Conduct Authority found in 2018 that more increases the risk of debt and destitution. Centralisation than half of rural residents exhibit financial vulnerability. and digitalisation of the welfare system creates further This project investigates why and how people in rural areas difficulties, given the inadequate broadband and mobile experience (and negotiate) poverty and social exclusion, coverage of rural Britain and loss of public transport. with a focus on financial hardship and vulnerability. Centralisation of advice and support services exacerbates It examines the roles of societal processes, individual these difficulties for those without the digital and other circumstances and various sources of support (markets; skills required to negotiate complex and confusing systems, state; voluntary and community organisations; family especially for people with literacy problems and/or poor and friends). Interviews were conducted with individuals mental health. Related to this is the distance unwell people experiencing financial vulnerability and representatives are required to travel for work capability assessments. Apart of organisations offering support in 3 case study areas from central government’s welfare provision, the local state between October 2019 and September 2020, so both provides many important services such as education, health, before and during the Covid-19 pandemic. The study areas social care and housing, all of which tend to have been were Harris, East Perthshire and Northumberland. centralised or reduced in rural areas despite the best efforts of many rural councils to maintain them. Notwithstanding Rural economies now have far fewer jobs in land-based the financial pressures, we found examples of innovative activities and manufacturing with most people employed practices, often in collaboration with voluntary and in services such as health, education, tourism and retail, community organisations (VCSEs). although there is much potential for new rural enterprise. While some residents commute to (or tele-commute to) Public spending cuts also reduce the funding available well-paid, secure professional jobs, much local employment to support rural VCSEs while leaving them to try and fill is precarious, low-paid or seasonal, with volatile and emerging gaps in state social provision across huge rural unpredictable incomes creating financial vulnerability. areas. Indeed, rural VCSEs provide services which, in an Contrasts between rich and poor, long-term residents and urban context, would be the state’s responsibility. This in-migrants, are accompanied by powerful narratives of research shows that the support and advice offered by social change and loss. VCSEs is valued highly by, and invaluable to, those in rural areas experiencing financial hardship or vulnerability. VCSEs Apart from earnings, people receive support from the state are most people’s “first port of call” in hard times, regarded in many ways, including welfare and pensions. There is by some as their sole source of support. The advice of evidence that the benefits system (both legacy benefits and Citizens Advice Bureaux (CABx) is of crucial importance to Universal Credit) is unable to deal fairly with the volatility people needing to claim state benefits, or to appeal against and irregularity of rural incomes: this is a serious cause Rural Lives Understanding financial hardship and vulnerability in rural areas 3 adverse decisions or sanctions. For some, advice by phone who may be excluded from each of these sources of or online is acceptable or even preferable, but for others support, and how support could be improved. Changes in face-to-face support remains essential. Foodbanks are a vital markets alongside welfare reforms have redistributed social source of emergency support in all three rural areas, mainly and societal risk towards the most vulnerable, with young for people of working age who have been let down by the people, people with mental or physical illness and lone state’s system of welfare provision – whether because of parents particularly disadvantaged. VCSEs have provided delays in receiving welfare benefits, a result of repayments crucial support to many of these groups, despite challenges or imposition of sanctions, or because of mental health or of reach into rural areas and funding pressures. literacy issues which limited their capacity to claim benefits It is striking how often people’s awareness of, and successfully. application for, national person-based measures, such as Family, friends and neighbours are another important source welfare entitlements, has been facilitated by local place- of support, but people’s ability to draw on this source varies based measures, such as advice and support from CABx according to the characteristics of the community they live and other VCSEs or through local partnership working. It is in, its social norms, social capital and personal relationships. also evident that national policies could be improved with There is a tendency to idealise rural communities as places the benefit of local place-based knowledge. This raises where everyone looks after one another, and this was questions about how to design effective combinations of evident especially in smaller communities for those who are person-based and place-based measures. well embedded in social networks: but this may be more A final section shows how the Covid-19 pandemic difficult for those who do not understand local social norms highlighted and amplified these issues, while also offering and lexicons or who have not made the social contacts. On glimmers of hope. A fuller report on Covid-19 and Rural top of this, there is stigma attached to seeking ‘charity’ or Poverty will be published shortly. to those thought to have behaved badly. This report concludes by articulating some policy challenges It is evident that living in a rural area affects local arising from these findings and suggesting opportunities for opportunity structures in many ways, both positive and policy interventions to address each of these challenges: negative, and that these affect different people’s lives unevenly. Importantly, the cost of living in rural, remote and • Many rural residents are at risk of poverty, while poverty island areas is substantially higher than in towns and cities, is perceived as an urban issue. partly because of distance to services and larger shopping • The welfare system is not well adapted to rural lives. centres (with lower prices), but also because of the costs • Much rural work is not ‘good work’, with incomes often of heating homes which are often off-grid and less well volatile and irregular. insulated. Fuel poverty is therefore more prevalent. Yet • There are barriers